Transcript Reading p.3-6 (sections 1.1 and 1.2)

Reading p.3-6 (sections 1.1 and 1.2)
 As you read:
 Write the term ECONOMICS vertically along the left
side of a notebook page. Begin each line with a
word that starts with the appropriate letter.
 Each line must help answer the question: What is
economics all about?
 Include the following terms somewhere in your
acrostic: enigma, resource, scarce, science,
normative, economics, and positive economics
 Every resource is scarce
 C
 O
 N
 O
 M
 I
 C
 S
You can’t always get what you want…
 Make a list of 5 things you do not have now but would
like to have.
 What are some resources that would be needed to
produce those things?
Economic way of thinking
 Scarcity
 People have limited
resources but unlimited
wants.
 Choices
 We don’t have enough
resources to produce all
the things we want.
 Scarcity forces
societies/individuals to
make choices about how
to use their scarce
resources.
Economic way of thinking
 Economics
 The science of how
societies/individuals
allocate their resources
to meet their needs.
 Economics is the science
of choices and costs.
 Tradeoff – The exchange of one benefit or advantage for another that is
thought to be better.
 Cost-Benefit Analysis – A way to compare the costs of an action with the
benefits of that action. If benefits exceed costs, then the action is worth
taking.
 Incentive – Any factor that encourages or motivates a person to do
something. Prices, taxes, and laws create incentives that influence how
people behave.
 Resource – Anything used to produce an economic good or a service.
 Benefits – what you gain from something in terms of money, time,
experience, or other improvements in your situation.
 Microeconomics – looks at economic decision making by individuals,
households, and businesses.
 Macroeconomics – focuses on the workings of an economy as a whole.
Read p. 6-11 (section 1.3)
 Create a chart in your notebook with
three columns, one for Principle of
Economics (there are 7 of them), one for a
symbol that helps explain that principle,
and one for a one-sentence summary of
the principle
Principle of Economics
Scarcity forces tradeoffs
Symbol
One-Sentence Summary
 Scarcity Forces Tradeoffs
 Limited resources force people to
make choices and face tradeoffs
when they choose.
Economy or comfort?
 Costs versus Benefits
 People choose something when the
benefits of doing so are greater
than the costs
 Which one? Camping or motel?
 Thinking at the Margin
 Most decisions involve choices
about a little more or a little less of
something
 Is it worth the time and money?
 Incentives Matter
 People respond to incentives in
generally predictable ways
 I’ll never speed again!
 Trade Makes People
Better Off
 By focusing on what we do well and
then trading with others, we will end
up with more and better choices than
by doing everything by ourselves

This is a good deal.
 Markets usually do better than
anyone or anything else at
coordinating exchanges between
buyers and sellers
 Markets Coordinate
Trade

Bananas from Belize! Mangoes from
Mexico!

Invisible Hand http://www.youtube.com/watch?v=ulyVX
a-u4wE&feature=youtu.be
 Future Consequences Count
 Decisions made today have future
(and often unintended)
consequences
 I’ll definitely never speed again!
 Teach tci visuals---economic
enigmas (bottled water, Starbucks,
and carpooling)
 www.teachtci.com
Examining Economic
Enigmas
#1 - Why do people pay for bottled water when it is
so much more expensive than tap water?
Why do people choose bottled water?
What are the BENEFITS and how do they
outweigh the COSTS?
What are incentives for buying water?
Do consumers still want bottled water, or have
people switched to filter and Sigg bottles?
Do consumers consider the environmental
impact of plastic water bottles, even if they
are recycled?
#3:
Why
don’t
more
people
carpool?
 Is the cost of gas affordable – even
with the current prices?

Do the incentives to carpooling
outweigh the hassles? What are the
hassles of carpooling?
What positive incentives could the
government offer?

Do people care that someday all these
car emissions will potentially harm the
environment?
COSTS – PRESENT
BENEFITS - FUTURE
Choose one to do on your own!
 Economic Enigma 4
 Economic Enigma 5
 Economic Enigma 6
 Why do economy seats on
airplanes cost different
amounts?
 Why do police officers get
paid so much less than
professional baseball players?
 Why does a five-day
Disneyland pass cost only 2.5
times what a one-day pass
costs?